By Simon Wragg
MORE dairy sales are likely as producers face falling prices and some look to realise quotas capital value.
And with a further cut in milk price due this month, the situation could be exacerbated further.
Auctioneers thought the number of dairy dispersals was high last year, but sales of diaries are certainly as busy this year and more dates are expected to be filled. Crewe-based auctioneer Andrew Wallace says: “Theres a few more to come forward.”
The reasons for dispersals are common – retirement, dissolving partnerships, and an uncertain future.
Milk Marques cut of 0.85ppl which will apply to May deliveries, will add to producers misery. Other dairies may follow suit.
However, for those looking to expand or invest in stock, quota or farms the market is full of opportunity, albeit at a price, as the rationalisation continues.
It seems likely that drop in income for most dairy holdings. “It will be most telling for those herds which arent costed.
They may be floundering and the owner is probably not aware theyre working for very little,” adds Mr Wallace. “That said, weve not had one instruction from a bank to disperse a herd.”
While smaller units are being squeezed out, larger ones are also on the move, particularly on kinder land.
Where grass leys take up IACS-registered land producers are cashing in and reinvesting, says Glos-based Gwilym Richards.
Shropshire-based land agent Richard Williams agrees. “Weve recently seen a 350-acre unit near Telford disperse its 120-cow herd and revert back to arable; most of the land was IACS aided.”
Smaller units are cashing in on a different form of agricultural income; demand for farmhouses for the residential market, he adds.
However, its the larger herds that are attracting interest. “Numbers are rising and there appears to be concern over how long quota will retain a capital value,” explains Mr Richards.
However, given the revised Agenda 2000 proposals, brokers now say it is taking a back seat against a personal or business decision to quit. “The likelihood is that quotas will remain until at least 2006,” says Townsends Mark Dyson.
Indications from Brussels suggest there is a distinct possibility that theyll remain until 2008. As such, prospects for buyers remains favourable. Quota sales should rally against a decision to lease-out supplies by allowing producers to claim capital relief, he adds.
The factors combined suggest numbers of dairystock sales look set to continue unabated, report auctioneers. “The slack is being taken up by those herds looking to expand, helping maintain sale-ring prices,” comments Mr Richards.
But what of the future? When the re-organisation settles down dairy cow values face an uncertain time.
“The law of supply and demand will take effect. Milkers, barren cow and calf markets are certainly down over the past few years. I cant see prices continuing unless restrictions, such as cull cows being used for meat, are relaxed,” says Mr Richards.
Brokers also expect quota value to tighten further, admits Mr Dyson.